Netflix Announces Split In Movie Renting Services

The American provider of on-demand internet streaming media in the United States, Canada, and Latin America and flat rate DVD-by-mail in the United States, Netflix Inc., has announced plans to split its DVD-by-post business from its movie streaming service.
The streaming service will still operate under the name of Netflix, but the postal DVD rental business will be renamed Qwikster.
The announcement comes two months after Netflix raised the price of their combined renting and streaming service by 60% resulting in a sharp drop in subscriber numbers.
Netflix had an estimated 25 million subscribers prior to the price rise, but according to a recent earnings report, it now expected subscribers to fall to 24 million at the end of September.
The news resulted in the firm dropping 19%, which brought the total decline in its share price to almost 50% following the July price rise.
The head of Netflix, Reed Hastings, said via the company's blog that problems had arisen as Netflix evolved from the DVD rental business that spurred its initial growth to a company in which most of its customers were streaming movies online.
He stated: "Streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently.
"After the split, customers will be charged for each service they use and their bank and credit card statements will show separate payments. In addition, any feedback they give on good or bad movies via one service will not be mirrored on the other."
Mr Hastings went on to say that "Arrogance" based on past success, meant the company neglected to keep its customers informed, and that he "messed up."
(JG/BMcC)